Does buying a plot of land suit your budget and needs? Find out

DELHI: In 1993, T Sridhar (name changed) bought four plots of land, each measuring 40 ft x 30 ft, outside Bangalore, for a total of Rs 1.7 lakh. At that point of time, the plots lay outside the city on the Bangalore-Madras highway. Today, the city has expanded to touch this area and a lot of development is taking place in the vicinity. The value of those four plots has soared to Rs 1.2 crore, which amounts to a compounded annual return of 23.72% over 20 years.

While this may seem too good to be true, given the current market conditions, it is hardly implausible. In fact, you too could earn high returns from investing in land. You may have to venture outside your city and the initial capital required may be high, but if you can rustle up the money, scout around diligently and be patient for a few years, you can earn such returns, thanks to the rapid urbanisation.

Plots give higher returns

When retail investors want to invest in real estate, most consider either a plot or an apartment. According to experts, it is better to invest in the former since the rate of return is likely to be higher. Says Mayank Saksena, managing director, land services, Jones Lang LaSalle India: "Once you construct on the plot, the real estate will have two components. While one component, land, continues to appreciate, the other, the building, depreciates in value as time goes by." The quality of building, its space planning, and quality of maintenance, all come into play at the time of deciding the valuation. In most cases, an empty plot scores higher when it comes to returns.

The demand-supply dynamics are also the reason for the higher appreciation of a plot compared with an apartment. Says Manish Aggarwal, executive director, Cushman & Wakefield India: "Plots appreciate more because their supply tends to be lower than that of apartments." He explains the underlying math. Suppose that a developer purchases 10 acres of land in Noida. Since the FSI (floor space index) allowed is 2.7, he can develop worth 27 acres or 1.1 million sq ft. If each apartment is approximately 1,500 sq ft, he will be able to develop about 800 flats on that land.

What if he were to sell only plots? One acre equals 4,047 sq m. Of this, he will be able to use only half; the rest will have to be devoted to infrastructure, green areas, and so on. If each plot is of about 250 sq m, he will be able to develop about eight plots on an acre, and 80 plots on 10 acres. Thus, there is a 10-fold difference between the supply of apartments and plots on a given piece of land.

DELHI/MUMBAI: merican real estate magnate Donald Trump, Chairman and President of The Trump Organisation, who is gearing up for the Republican Presidential nomination in 2016, is bullish on the Indian real estate sector.

DELHI: Shreya Shah will be moving from Nashik to Mumbai soon and has finalized a house to be taken up on rent. Oddly, she has never really laid eyes on it. "I got to know of the girl who lives there online, spoke to the landlord on the phone, and saw the photos on email. I will actually see it the day I move," says Shah, who works with a multinational bank.

DELHI: Like Noida Extension (Greater Noida West) and Raj Nagar Extension (Ghaziabad), a new developing zone – Gurgaon Extension (the area extending from Sohna Road and directly connected to the main Gurgaon-Sohna Road) – is being considered by realty experts as a good place for affordable-range housing. The value of investments could double here once IMT Sohna is up and running, experts say. Also, the Delhi-Mumbai dedicated freight corridor is located close by and all the mega industrial estates

DELHI: Real estate development along Gurgaon-Faridabad Road, which further connects to Ballabhgarh-Sohna Road, is in a boom phase. The scenic view of the Aravali hills and the valleys offered by the residential and hotel projects under construction in this area has ramped up the demand in this area. Already, this developing zone has a 9-hole golf course. The prevailing rate of housing projects here is in the range of Rs 7,500-10,500 per sq ft.

DELHI: In a major setback to realty projects in Noida, the National Green Tribunal (NGT) on August 14 ordered the Noida Authority to stop construction work of all projects which do not have requisite environmental clearances within 10km radius of Okhla bird sanctuary. The tribunal has also directed Noida Authority to conduct a fresh survey and find out the projects falling within the radius.

DELHI: The real estate regulation and development bill that seeks to protect home buyers from dishonest builders was tabled in the Rajya Sabha on Wednesday by minister of housing and urban poverty alleviation Girija Vyas.

DELHI: A bill seeking to protect home buyers from unscrupulous developers and builders and having provisions like jail term of up to three years for offences like putting up misleading advertisements about projects repeatedly, was introduced in Rajya Sabha on Wednesday.

DELHI: DLF, the largest real estate developer in India, said it will cut debt by about a quarter to Rs 15,500 crore over the next nine months, mainly on the back of receipts from the sale of its luxury hotel chain Aman Resorts and some land divestitures.